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DISH goes all in on 5G: How the satellite TV company wants your wireless bill

BY Joe Supan | Mon Jul 08, 2019
DISH goes all in on 5G: How the satellite TV company wants your wireless bill

What does a satellite TV company have to do with 5G?

If all goes according to DISH’s plans, everything.

It’s no secret that DISH has been hemorrhaging customers (and revenue) for a while. At the end of 2018, the company had 9.9 million subscribers, 1.1 million fewer than the year before. It’s kept that alarming pace in 2019, too, losing another 266,000 customers in the first quarter alone.

Even Sling TV, DISH’s live streaming service, has shown some troubling signs, gaining only 7,000 subscribers in the first quarter of 2019, compared to 91,000 in the same period last year. All of that has resulted in a 5.35% decrease in revenue from 2017 to 2018.

How does DISH plan to turn things around?

Investing in 5G is a hedge against this trend. Over the past decade, DISH has spent $20 billion at FCC auctions — essentially every bit of capital the company has — on the wireless spectrum across low, mid and high-band frequencies that would enable the sending of video and other data without the need for cable or a satellite antenna.

So far, DISH’s foray into 5G has been marked by heavy doses of doubt, bickering and accusations of foul play. Many observers have openly doubted whether or not the company actually plans on using all the wireless spectrum it’s purchased over the years or if it’s simply stockpiling those assets to sell at a later date.

In August 2018, Wall Street market analyst firm MoffettNathanson suggested that a sale was DISH’s only way out. “A spectrum sale (and at a price above that which is already implied in DISH’s stock price) is the ONLY positive scenario for the stock.”

While investors may have been hoping for a sale of those vast spectrum assets, DISH has remained committed to building out its own network.

“We’re past the point of no return at this point to do something different,” DISH co-founder and chairman Charlie Ergen said on a call with investors in February.

He doubled down on that sentiment again at a conference in April, saying, “You increase your odds when you burn the bridges and are all in.” He also noted that Dish was taking “every penny [it] has ever earned and investing into a wireless network.”

DISH has until March 2020 to start using its spectrum

Ergen keeps a picture of Mount Everest on his phone with a clock counting down the minutes until DISH launches phase one of its wireless network.

“Every time an employee logs in to their computer, they’ll see this countdown,” Ergen told Bloomberg. “This is Management 101 — it’s how you get disparate people to focus in one direction.”

In 2013, DISH and the FCC settled on a March 7, 2020 deadline. By this date, DISH must be able to prove to the FCC that it can offer service to 70% of the population in the 176 markets where it purchased spectrum in the 700 Mhz band. That sounds ambitious, but it really only amounts to about 2% of DISH’s massive spectrum holdings.

Phase one: Internet of Things

DISH plans on meeting that deadline by spending between $500 million and $1 billion to build a network tailored to the Internet of Things (IoT) devices. This could potentially serve a huge array of technologies, from self-driving vehicles to sensors on farming equipment.

That said, most observers are skeptical of the real-world applications for DISH’s IoT plans. Many see it as a “license saver” strategy, meant only to satisfy the minimum requirements set by the FCC for DISH to keep its spectrum assets.

MoffettNathanson called DISH’s IoT network “transparently unusable,” and T-Mobile even filed a complaint with the FCC in January, arguing that DISH’s plans “do not make sufficient use of the valuable spectrum” and that the company is “merely attempting to forestall the Commission’s recapture of its licenses.”

Nevertheless, DISH has moved forward with its plans, constructing its first tower in January in Windsor, Colorado, an hour north of its headquarters in Englewood.

“The deployment team is in full swing,” said Erik Carlson, DISH’s president and CEO, on an earnings call with investors. “Crews are working at … staging and installing gear [at] towers across the nation. A lot of work is ahead but progress is definitely mounting.”

Not everyone took that claim at face value. Soon after the video was posted, T-Mobile CEO John Legere pressed send on a harsh tweet likening DISH’s use of wireless spectrum to the TV show Hoarders:

Despite the overwhelming skepticism from analysts and competitors, DISH has so far stuck to its stated goals. “Our expectation is that we’ll meet the deadline,” Ergen said in February, calling concerns that DISH won’t meet the FCC’s requirements “overblown.”

Phase two: 5G network

The larger goal for DISH is a standalone 5G network that will compete head-on with Verizon and AT&T, and won’t require an underlying 4G network to support it. DISH would need to spend an estimated $10 billion to make this happen, dwarfing the $500 million to $1 billion being spent on phase one.

“We are more excited about phase two and it will make a difference in every industry and everyone’s lives,” Ergen said in April.

Jeff Stoops, CEO and President of radio tower company SBA Communications, said that DISH has already been making progress on phase two.

“I’m surprised at what I see as a general misperception of what is going on with DISH,” he said at an investors conference in March. “They are serious about their deployment, and they are deploying in a traditional way.” He also noted that DISH is leasing space on many of the same towers as AT&T and Verizon.

For their part, leaders at DISH have stressed patience as they build out its 5G network. Ergen even went as far as to make a rather tone-deaf comparison: “I grew up in this little town called Oak Ridge, Tennessee, which was famous for being part of the Manhattan Project,” he told Bloomberg in December.

“It took them four years to design and build the atomic bomb. And that’s about how long it’s going to take us to design and build the greatest 5G network. And we are in the first year of building that today.”

How DISH could become the nation’s fourth wireless carrier

“We won’t be successful as a lone wolf out there,” Ergen said more than a year ago. “We’re not that good.”

DISH has a long history of looking for a partner for its fledgling wireless business to compete with Verizon, AT&T and Sprint/T-Mobile. In 2013, the company tried to purchase mobile provider Clearwire, but was outbid by Sprint.

Ergen “is a hard negotiator,” Erik Prusch, the CEO of Clearwire at the time, told CNBC last year. “His structures and how he wanted to participate in the economics was always a little bit less straightforward, and that made it challenging to become a partner with him.”

Soon after, DISH then tried to buy Sprint itself, but was outbid again by the Japanese conglomerate SoftBank.

Fast forward to July 2019. DISH has long been in talks to purchase assets from T-Mobile in order to facilitate the latter’s $26 billion merger with Sprint. The Department of Justice (DOJ) gave their seal of approval, pending a few more concessions from Sprint.

For $6 billion, DISH will get even more wireless spectrum from T-Mobile, plus the prepaid wireless brand Boost Mobile. DISH will reportedly use Sprint and T-Mobile’s combined network for about six or seven years, at which point DISH would be required to move onto its own network. That will cost in the neighborhood of another $10 billion for DISH.

This was attractive to the DOJ primarily from a competition standpoint. With the T-Mobile/Sprint merger effectively eliminating one of the four wireless carriers in the U.S., DISH is now positioned to fill that gap.

DISH has played up this angle as well. According to an FCC filing in June, Ergan cited “the need for a minimum of four nationwide mobile network operators” as he argued for DOJ approval of DISH’s purchase of T-Mobile’s assets.

When will DISH be a viable option for 5G?

While DISH has made impressive strides over the past year, we’re probably a long way off from actually seeing it in action. In his questionable atomic bomb analogy, Ergan estimated that DISH was in the first of a four-year timeline for building a 5G network. If that holds true, we could expect to see a finished product in early 2023.

While that’s a long way off, there’s no denying that the satellite TV company is serious about becoming a major player in the next generation of wireless technology.

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